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  • Making Sense of White-Collar Crime:Theory and Research

    Sally S. Simpson*

    The field of white-collar/corporate crime has been studied byscholars from many disciplinary fields. Yet, the ambiguity andcomplexity of the subject, dearth ofprogram and policy evaluation, pooror inaccessible data and lack of systematic empirical research hasprecluded any consensus about its causes or what can be done to preventand control it. Concern about the global financial crisis of 2008 and itsassociation with fraudulent activities in the mortgage and securitiesmarkets has brought white-collar crime back to the forefront ofcriminological inquiry. New research-particularly evidence-basedcriminology and criminal justice and vignette studies of corporatecrime-has provided insight into some of the longstanding debates in thefield while also revealing new and interesting puzzles for scholars toexplore. These new developments are summarized along withsuggestions for new research on mortgage fraud, including therevitalization of a "criminogenic tier" approach to organizationalactors, firms, and markets, and the use of network analysis as a means tomap and measure key ties among fraudsters, network centrality, andreach.

    I. INTRODUCTION

    Criminologists and legal scholars have defined and classified white-collarcrime in a variety of different ways.' Two general types of white-collar crimes arediscussed in this paper-those committed by companies and their managers to"achieve the goals of the business" (corporate crimes) and offenses committed byindividuals that may or may not involve organizational or business resources, buttend to be tied more to self-interest (e.g., embezzlement or income tax fraud).Most remarks in this paper center around corporate crime, but the intersection ofthe two types, especially in the area of mortgage fraud, is of particular interest.

    . Professor and Chair, Department of Criminology and Criminal Justice, University ofMaryland, College Park. This is a revised version of the Walter C. Reckless-Simon Dinitz Lecture,delivered at The Ohio State University on April 22, 2010. I wish to acknowledge the Reckless andDinitz families for their support of the Lecture series. Special thanks to Ruth Peterson, Laurie Krivo,Joshua Dressler, the Sociology and Law faculty and students for hosting the visit, and Melissa Roriefor her comments on this article.

    Stuart P. Green, The Concept of White Collar Crime in Law and Legal Theory, 8 BuFF. CluM.L. REv. 1, 1 (2004).

    481

  • OHIO STATE JOURNAL OF CRIMINAL LAW

    Thinking about corporate crime requires recognition that both organizationsand individuals may be illegal actors and potential targets for crime prevention andcontrol (sanctions). It also necessitates familiarity with Edwin Sutherland'sargument that the traditional conception of crime and justice, with its exclusivefocus on criminal law and criminal justice, is too narrow to capture the behaviorsof interest.2 In this paper, I follow Sutherland's lead by adopting a broad definitionof corporate crime that includes organizational behavior proscribed by criminal,civil, and regulatory law and administered by the appropriate system of justice.

    Several years ago, in an essay published in the Newsletter of the AmericanSociety of Criminology, I noted that the content and treatment of white-collarcrime in most sociology/criminology textbooks had changed very little over thepast decades.3 I linked this stagnation to three interrelated problems: (1) white-collar crime research is rarely sponsored and funded; (2) the historical dominanceof radical/critical epistemological approaches that are often at odds withpositivistic criminology; and (3) the subject matter is complex and difficult tostudy.

    After the 2008 global financial crisis-brought about in large part bymortgage, insurance, and securities frauds-white-collar crime scholars werehopeful that the government would declare one of its infamous "crime wars" andwhite-collar/corporate crime would finally get the attention and funding itdeserves. With a few exceptions, however, we have been disappointed. Even ifthe political will to prioritize white-collar crime was in place, unresolved data andmethods problems limit both the direction and degree of progress that can beachieved.

    In the next section, some of the major problems confronting white-collarcrime researchers (especially those related to data and measurement) arehighlighted. This is followed by a review of what has been learned from evidence-based approaches and recent vignette studies about corporate crimeprevention/control, along with current knowledge gaps. The section concludeswith several promising directions for further conceptual and empirical white-collarcrime work, including: (1) fraud, foreclosures, and neighborhood crime; (2)criminogenic tiers; and (3) network analysis of mortgage fraud participants.

    II. MAKING SENSE OF THE LITERATURE

    A. Data Limitations

    Calculating estimates of crime incidence and prevalence generally is adifficult task. But, unlike traditional street crime, the task here is even moretroublesome. It is difficult to measure white-collar crime because all of the typical

    2 EDwIN H. SUTHERLAND, WHITE COLLAR CRIME 6 (1949).

    Sally S. Simpson, The Criminological Enterprise and Corporate Crime, CRIMINOLOGIST,July-Aug. 2003, at 1, 3-5.

    482 [Vol 8:48 1

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    sources of crime data (including official data, offender self-reports, andvictimization reports) are limited in scope, not collected in a systematic manner, orhave unique problems that discourage operationalization and generalization.

    Some of the better known studies of white-collar and corporate crime haveused some kind of "official" data to assess crime incidence and prevalence.Sometimes, cases are collected at the far end of the justice process (e.g.,"convicted" offenders).4 Other researchers rely on "arrest/case" data or acombination of sources.' For instance, in their study of frauds in the savings andloan industry, Calavita, Tillman, and Pontell used criminal referral data.6 In Mywork, I have supplemented case data (criminal, civil, and administrative "arrests"and "resolved" case decisions) with information gleaned from interviews, companyself-reports (Environmental Protection Agency (EPA) Discharge MonitoringReports), and survey data (in particular, factorial surveys that include hypotheticalscenarios that measure managers' offending "intentions"). Still other researchersextrapolate crime estimates from known incidents and case studies.8 All of thesedata sources have severe limitations which are likely to produce highly biasedcrime incidence and prevalence estimates.

    The Uniform Crime Reports (UCR) contain arrest data on white-collar crime,including fraud, forgery/counterfeiting, embezzlement, and all other offenses.9

    Data elements within these categories can be broken down by the sex, age, andrace of the arrestee.'o The UCR are not very helpful in studying corporate crime

    4 E.g., DAVID WEISBURD ET AL., CRIMES OF THE MIDDLE CLASSES: WHITE-COLLAROFFENDERS IN THE FEDERAL COURTS XV (1991). See also SUTHERLAND, supra note 2, at 3-5; BRIANFORST & WILLIAM RHODES, NAT'L INST. OF JUSTICE, SENTENCING IN EIGHT UNITED STATES DISTRICT

    COURTS, 1973-1978, INTER-UNIVERSITY CONSORTIUM FOR POLITICAL AND SOCIAL RESEARCH STUDYNo. 8622 (3rd ed. 1990), available at http://www.icpsr.umich.edu/cgi-bin/file?comp=none&study-8622&ds=0&fileid=744550.

    E.g., MARSHALL B. CLINARD & PETER C. YEAGER, CORPORATE CRIME xi, app. at 329-50(1980).

    6 K. Calavita, R. Tillman & H.N. Pontell, The Savings and Loan Debacle, Financial Crime,and the State, 23 ANN. REV. Soc. 19, 20-21 (1997).

    See, e.g., Sally S. Simpson, The Decomposition of Antitrust: Testing a Multi-Level,Longitudinal Model of Profit-Squeeze, 51 AM. Soc. REV. 859, 862-65 (1986) [hereinafter Simpson,Decomposition ofAntitrust]; SALLY S. SIMPSON, CORPORATE CRIME, LAW, AND SOCIAL CONTROL 16-

    20, app. at 163-73 (2002) [hereinafter SIMPSON, CORPORATE CRIME]; Sally S. Simpson, Joel Garner& Carole Gibbs, Final Technical Report: Why Do Corporations Obey Environmental Law?Assessing Punitive and Cooperative Strategies of Corporate Crime Control 6-7 (2007), available athttp://www.ncjrs.gov/pdffilesl/nij/grants/220693.pdf.

    8 See, e.g., Raymond J. Michalowski & Ronald C. Kramer, The Critique ofPower, in STATE-CORPORATE CRIME: WRONGDOING AT THE INTERSECTION OF BUSINESS AND GOVERNMENT I (RaymondJ. Michalowski & Ronald C. Kramer eds., 2006); DAVID R. SIMON, ELITE DEVIANCE 97-131 (8th ed.2006).

    9 Cynthia Barnett, The Measurement of White-Collar Crime Using Uniform Crime Reporting(UCR) Data, U.S. DEP'T OF JUSTICE, 2, http://www.fbi.gov/about-us/cjis/ucr/nibrs/nibrswcc.pdf (lastvisited Mar. 18, 2011).

    10 Id

    2011]1 483

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    because: most cases are not investigated and recorded by the police per se; the dataelements are limited and thus lack utility for purposes of theory development ortesting; and little is known about how representative arrested offenders are of themore general offending population. The National Incident-Based ReportingSystem (NIBRS) may yield more promise than the UCR data, as it captures moreoffense types and has the ability to drill down to incident characteristics (includinglocation type, property description, and type of victim)." However, NIBRS dataalso are limited to known criminal incidents. In the case of white-collar crime,discovery by the police is problematic for a number of reasons-not the least ofwhich is that the victim is often unaware that a crime has occurred.12 Critics alsospeculate that the data are likely to be biased downward (from executives to lesspowerful employees, away from comp

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